Video: Democrats and the economy

PHILADELPHIA — Hillary Clinton, seizing on voters' economic fears in her fractious White House nomination fight against Barack Obama, urged President George W. Bush to name an emergency working group on foreclosures to find new ways to solve the U.S. housing crisis.

Clinton is fighting to stay in the race against Obama, and campaigning heavily in Pennsylvania, an industrial state with a large blue collar population that polls show leans toward her. The state holds its presidential primary April 22 and is the last major contest of the nominating season, with 158 delegates at stake.

A panel would recommend legislation and other steps to "help re-establish confidence in our economy," Clinton said in prepared remarks for a speech on the economy in Philadelphia.

Clinton said she supports proposed legislation to establish a federally backed auction system for hundreds of thousands mortgages in default. Under the Democratic-drafted plan, lenders "could sell mortgages in bulk to banks and other buyers," she said, who in turn would "restructure them to make them affordable for families, because they know the government will guarantee them once they're reworked."

Clinton said a recently enacted $168 billion stimulus package "did next to nothing to help homeowners and communities struggling with foreclosure."

The New York senator said the panel should be led by financial experts such as Robert Rubin, who was treasury secretary in her husband's administration, and former Federal Reserve chairmen Alan Greenspan and Paul Volcker.

Clinton's speech follows a weekend in which was Obama's election campaign was heavily criticized for allowing a retired general to equate comments by her husband to the McCarthyist anti-communist witch hunts of the 1950s.

On Sunday, Pennsylvania Gov. Ed Rendell accused the Obama campaign of twisting former President Bill Clinton's words. Clinton was criticized late last week by retired Gen. Merrill "Tony" McPeak, a co-chairman of Obama's campaign, who accused the ex-president of being divisive and compared him to Joseph McCarthy, the 1950s communist-hunting senator in the United States, for questioning Obama's patriotism.

Clinton, speculating about a presidential matchup pitting his wife against Republican nominee-in-waiting John McCain, had told a group of veterans in North Carolina: "I think it would be a great thing if we had an election year where you had two people who loved this country and were devoted to the interest of this country.

Separately, senators from both parties urged the Department of Justice to investigate the unauthorized searches of the passport files of Clinton, Obama and McCain by State Department contract workers.

Last week, Secretary of State Condoleezza Rice apologized to the three after the department confirmed the passport files had been compromised. It was not clear whether the workers — two have been fired — saw anything other than the basic personal data — such as name, citizenship, age, Social Security number and place of birth — that is required when applying for a passport.

Obama last week was trying to control damage from provocative comments by Rev. Jeremiah Wright, who had claimed the United States brought the Sept. 11, 2001 terror attacks on itself and had asked God to damn America for racial bigotry. National public opinion polls taken in the midst of the controversy showed Clinton pulling ahead of Obama.

Obama made a major speech on race last Tuesday, but he refused to "disown" Wright, who married the candidate and his wife and baptized their children.

Despite his recent difficulties, Obama still leads the all-important overall delegate count with 1,620 to Clinton's 1,499. But neither candidate is likely to get enough delegates in the remaining primaries and caucuses to reach the 2,024 needed to win nomination at the party's convention in late August in Denver. That means they must rely on support from superdelegates — party officials and other leaders who are free to vote for whomever they choose — to become the nominee.

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